The Law Society is mounting an all-out campaign against proposed changes in the taxation of professional businesses.
The Inland Revenue has announced its intention to tax professional partnerships on work as it is done rather than when payments are received. This means partners will have to pay a one-off 'catch-up' payment, which could be as high as £30,000, as the tax point is brought forward.
Partners will face a further one-off tax hike because adding in work in progress inflates paper profits without generating new cash.
'This is an unfair, punitive measure,' said society president Philip Sycamore. 'We are extremely concerned and we are going to work on it straight away.'
Following a half-day meeting of the policy committee on 7 January, at which the tax changes topped the agenda, the society is seeking an urgent meeting with Treasury secretary Dawn Primarolo to clarify the government's intentions. 'We don't know if they understand the full implications,' commented Sycamore.
The Revenue has given until 14 February for comments but it is unclear what consultation, if any, will follow.
The society will establish a task force immediately. Sycamore is writing to all firms in England and Wales to encourage information sharing, and he will also approach the Bar and other professional bodies.